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Cowan Corporation manufactures computer processors for leading computer makers. (Click to view additional information.) The plant's initial budgeted revenues and quality costs for 2020 are as follows: (Click the icon to view the budgeted revenues and quality costs for 2020.) Click the icon to view Matthew's quality options.) Read the requirements. Requirement 1. Calculate the ratio of each budgeted costs-of-quality category (prevention, appraisal, internal failure, and external failure) to budgeted revenues for 2020. Are the budgeted total costs of quality as a percentage of budgeted revenues currently less than 8%? Begin by selecting the prevention costs. Calculate the ratio of prevention costs to revenues for 2020, then continue with appraisal, internal failure and external failure costs. Finally, calculate the total costs of quality and the total percentage of revenues. (Round percentages to two decimal places. X.XX%.) Percentage of Costs of Quality Cost Total Revenue Prevention Costs % - X Requirements 1. Calculate the ratio of each budgeted costs-of-quality category (prevention, appraisal, internal failure, and external failure) to budgeted revenues for 2020. Are the budgeted total costs of quality as a percentage of budgeted revenues currently less than 8%? 2. Which of the two quality options should Matthew propose to the general manager, Nate Taylor? Show the impact on quality costs and revenues for the two options: (a) reengineer the manufacturing process for $158,000 and (b) increase quality training expenditure by $32,000 per year. Do the calculations using a 1-year time horizon. 3. Suppose Matthew decides not to present the quality training option to Nate. Is Matthew's action unethical? Explain - new new More info que porati nakers view Matthew Magee is the management accountant for one of Cowan's largest manufacturing plants. His bonus is based on the plant's revenues. The plant's general manager, Nate Taylor, has just returned from a meeting at corporate headquarters where quality expectations were outlined for 2020. Nate calls Matthew into his office to relay the corporate objective to minimize quality costs and that total quality costs will not exceed 8% of total revenues by plant under any circumstances. Nate asks Matthew to provide him with a list of options for meeting corporate headquarters' quality objective. ve ty - X Data table nt 1. reve De ESS $ 8.800,000 lecting external failure places, Xxx app s. (Round pe cuality Costs Revenues Quality costs: Inspection of raw materials Raw material scrap Customer support Quality design engineering Engineering redesign of failed parts Rework of failed parts Product inspection Warranty repairs Quality control training for production staff 1,840 25,300 44,000 87,000 73,300 63,800 190,000 172.000 82,000 More info For each processor sold at the current price, the contribution margin is positive. Prior to receiving the new corporate quality objective, Matthew had collected information for all of the plant's possible options for improving both product quality and costs of quality. He was planning to introduce the idea of reengineering the manufacturing process at a one-time cost of $158,000, which would decrease product inspection costs by approximately 15% per year and is expected to reduce warranty repairs and customer support by an estimated 40% per year. It would also allow the plant to produce and sell 5% more units. After seeing the new corporate objective, Matthew crunches the numbers again and comes up with another idea. By increasing the cost-of-quality control training for production staff by $32,000 per year, the plant would reduce product inspection costs by 35% annually and reduce warranty repairs and customer support costs by 45% per year as well. However, under this option, the plant wouldn't be able to increase its production and sales. Cowan Corporation manufactures computer processors for leading computer makers. Click to view additional information.) The plant's initial budgeted revenues and quality costs for 2020 are as follows: (Click the icon to view the budgeted revenues and quality costs for 2020.) Click the icon to view Matthew's quality options.) Read the requirements. Requirement 1. Calculate the ratio of each budgeted costs-of-quality category (prevention, appraisal, internal failure, and external failure) to budgeted revenues for 2020. Are the budgeted total costs of quality as a percentage of budgeted revenues currently less than 8%? Begin by selecting the prevention costs. Calculate the ratio of prevention costs to revenues for 2020, then continue with appraisal, internal failure and external failure costs. Finally, calculate the total costs of quality and the total percentage of revenues. (Round percentages to two decimal places, X.XX%) Percentage of Costs of Quality Cost Total Revenue Prevention Costs % Cowan Corporation manufactures computer processors for leading computer makers. (Click to view additional information.) The plant's initial budgeted revenues and quality costs for 2020 are as follows: (Click the icon to view the budgeted revenues and quality costs for 2020.) (Click the icon to view Matthew's quality options.) Read the requirements More info pisal , internal failure, and external failure) ed revenues currently less than 8%? 20. then continue with appraisal, internal be of revenues. (Round percentages to Matthew Magee is the management accountant for one of Cowan's largest manufacturing plants. His bonus is based on the plant's revenues. The plant's general manager, Nate Taylor, has just returned from a meeting at corporate headquarters where quality expectations were outlined for 2020. Nate calls Matthew into his office to relay the corporate objective to minimize quality costs and that total quality costs will not exceed 8% of total revenues by plant under any circumstances. Nate asks Matthew to provide him with a list of options for meeting corporate headquarters' quality objective. . More info For each processor sold at the current price, the contribution margin is positive. Prior to receiving the new corporate quality objective, Matthew had collected information for all of the plant's possible options for improving both product quality and costs of quality. He was planning to introduce the idea of reengineering the manufacturing process at a one-time cost of $158,000, which would decrease product inspection costs by approximately 15% per year and is expected to reduce warranty repairs and customer support by an estimated 40% per year. It would also allow the plant to produce and sell 5% more units. After seeing the new corporate objective, Matthew crunches the numbers again and comes up with another idea. By increasing the cost-of-quality control training for production staff by $32,000 per year, the plant would reduce product inspection costs by 35% annually and reduce warranty repairs and customer support costs by 45% per year as well. However, under this option, the plant wouldn't be able to increase its production and sales. ng The plant's initial budgeted revenues and quality costs for 2020 are as follows: B (Click the icon to view the budgeted revenues and quality costs for 2020.) Data table Revenues $ 8,800,000 $ 1,840 25,300 44,000 87,000 Quality costs: Inspection of raw materials Raw material scrap Customer support Quality design engineering Engineering redesign of failed parts Rework of failed parts Product inspection Warranty repairs Quality control training for production staff 73,300 63,800 190,000 172,000 82,000 Requirements 1. Calculate the ratio of each budgeted costs-of-quality category (prevention, appraisal, internal failure, and external failure) to budgeted revenues for 2020. Are the budgeted total costs of quality as a percentage of budgeted revenues currently less than 8%? 2. Which of the two quality options should Matthew propose to the general manager, Nate Taylor? Show the impact on quality costs and revenues for the two options: (a) reengineer the manufacturing process for $158,000 and (b) increase quality training expenditure by $32,000 per year. Do the calculations using a 1-year time horizon. 3. Suppose Matthew decides not to present the quality training option to Nate. Is Matthew's action unethical? Explain
